Asia-Pacific at economic crossroads in Q2 2024: S&P Global

The report sheds light on the regional economic trends, emphasising the significant progress made by the US in curbing inflation in 2023 against a backdrop of sustained economic activity. Despite these advancements, the enduring strength of the economy and a tight labour market pose challenges to further disinflation efforts. Notably, there has been a recent uptick in core inflation, signalling potential hurdles ahead for policymakers.

The US Federal Reserve is projected to adopt a cautious approach in the coming months. Current projections suggest the initiation of a monetary policy easing cycle with a 25-basis-points rate cut around mid-2024, followed by two additional reductions throughout the year, cumulatively amounting to a 75 basis points decrease, setting the rate at 4.5 per cent-4.75 per cent. This revised forecast, leaning towards a more conservative rate-cutting strategy, emerges in response to stronger-than-expected economic growth in the final quarter of 2023. The surprising economic resilience has prompted an upward revision in the US growth forecast for 2024 to 2.4 per cent, up from an earlier estimate of 1.5 per cent, as per the Economic Research: Economic Outlook Asia-Pacific Q2 2024 report.

Within the Asia-Pacific region, the economic outlook is characterised by a cautious stance towards monetary policy easing. Countries across the region are carefully weighing their options, striving to strike a balance between fuelling economic growth and managing inflationary pressures. The region's diverse economic landscape presents a variety of challenges and opportunities for policymakers as they navigate through the complex global economic environment. The focus remains on achieving sustainable growth while keeping inflation in check, highlighting the need for strategic patience and precision in policy adjustments.

Among developed economies, S&P Global projected growth to pick up in trade-dependent developed ones such as South Korea, Taiwan, and Singapore; and fall in relatively domestic demand-led ones such as Japan and Australia. For Asian emerging market (EM) economies, S&P Global generally projected robust growth, with India, Indonesia, the Philippines, and Vietnam in the lead.

Fibre2Fashion News Desk (DP)